Athens
First Bank & Trust Company
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: RIN Number 3064-AC50:
FDIC Proposed Increase in the Threshold for the
Small Bank CRA Streamlined Examination
Dear Sir:
I am a senior vice president of Athens First Bank and Trust Company,
located in Athens, Georgia. Athens is the home of the main campus
of the University of Georgia and has a population of just above 100,000.
My bank has assets of approximately 940 million, and we are already
are subject to the large bank exam. Our holding company is over twenty
billion in assets.
I am writing
to strongly support the FDIC’s proposal to raise
the threshold for the streamlined small bank CRA examination to $1
billion without regard to the size of the bank’s holding company.
This would greatly relieve the Regulatory burden imposed on many
small banks such as my own under the current Regulation, which is
required to meet the standards imposed on the nation’s largest
$1trillion dollar banks. I understand that this is not an exemption
from CRA and that my bank would still have to help meet the credit
needs of its entire community and be evaluated by my regulator. However,
I believe that this would greatly reduce the regulatory burden required
by CRA.
I also support the addition of a community development criterion
to the small bank
examination for larger community banks. It appears to be a significant
improvement over
the investment test. However, I urge the FDIC to adopt its original
$500 million threshold
for small banks without a CD criterion and only apply the new CD
criterion to community
banks greater than $500 million up to $1 billion. Banks under $500
million now hold about
the same percent of overall industry assets as community banks under
$250 million did a
decade ago when the revised CRA regulations were adopted, so this
adjustment in the CRA
threshold is appropriate. As FDIC examiners know, it has proven extremely
difficult for
small banks, especially those in rural areas, to find appropriate
CRA qualified investments in
their communities. Even in a community the size of Athens we have
found it difficult to find qualified investments. Many small banks
have had to make regional or statewide investments
that is extremely unlikely to ever benefit the banks’ own communities.
That was certainly
not intent of Congress when it enacted CRA. We have had to make some
investments in a state wide (Georgia Affordable Housing) and a national
investment company in order to obtain a reasonable CRA investment
portfolio.
An additional
reason to support the FDIC’s CD criterion is
that it significantly reduces the
current regulation’s “cliff effect.” Today, when
a small bank goes over $250 million, it must
completely reorganize its CRA program and begin a massive new reporting,
monitoring and
investment program. If the FDIC adopts its proposal, a state nonmember
bank would move
from the small bank examination to an expanded but still streamlined
small bank
examination, with the flexibility to mix Community Development loans,
services and
investments to meet the new CD criterion. This would be far more
appropriate to the size
of the bank, and far better than subjecting the community bank to
the same large bank
examination that applies to $1 trillion banks. This more graduated
transition to the large
bank examination is a significant improvement over the current regulation.
I strongly oppose
making the CD criterion a separate test from the bank’s overall
CRA
evaluation. For a community bank, CD lending is not significantly
different from the
provision of credit to the entire community. The current small bank
test considers the
institution’s overall lending in its community. The addition
of a category of CD lending (and
services to aid lending and investments as a substitute for lending)
fits well within the
concept of serving the whole community. A separate test would create
an additional CD
obligation and regulatory burden that would erode the benefit of
the streamlined exam.
I strongly support
the FDIC’s proposal to change the definition
of “community
development” from only focusing on low- and moderate-income
area residents to including
rural residents. I think that this change in the definition will
go a long way toward
eliminating the current distortions in the regulation. We caution
the FDIC to provide a
definition of “rural” that will not be subject to misuse
to favor just affluent residents of rural
areas.
In conclusion, I believe that the FDIC has proposed a major improvement
in the CRA
regulations, one that much more closely aligns the regulations with
the Community
Reinvestment Act itself, and I urge the FDIC to adopt its proposal,
with the
recommendations above. I will be happy to discuss these issues further
with you, if that
would be helpful.
Sincerely,
John A. Fowler
Senior Vice President
Athens First Bank & Trust Company
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